Chamberlain finally sells KiwiSaver business

NZX-owned funds management business, Smartshares, has bought the SuperLife business headed by Michael Chamberlain.

Monday, December 8th 2014, 8:43AM

SuperLife, like Smartshares runs a funds management business based on passive management funds.

Good Returns understands from reliable sources that the SuperLife business has been on the market for some time and price had always been a sticking point with previous purchasers.

NZX will be making an initial payment of $20 million funded through $10 million of bank debt and issuance of $10 million of NZX shares to the vendors which are subject to disposal restrictions. Further payments of up to $15 million are based on retention and growth of the funds under management over a three year period. These further payments, if targets are achieved, will be $5 million of NZX shares and up to $10 million in cash.

SuperLife has more than $1.27 billion of funds under management and 41,000 members.

The exchange intends to combine the two business which will make it the country’s leading passive funds manager and provider of Exchange Traded Funds (ETFs).

NZX intends to manage the combined funds management business separately from its capital markets business. A search for a chief executive for the combined business is now underway. As part of the acquisition, SuperLife’s directors, Michael Chamberlain and Owen Nash will continue on as directors of SuperLife, and Chamberlain will join NZX’s management team.

NZX has for some time been exploring options to grow the scale of its passive funds management business and funds administration capabilities, and SuperLife’s passive approach and customer base makes the business an excellent strategic fit with NZX’s existing Smartshares business.

“This acquisition is driven by our view that there is a clear opportunity in the market for a low cost, passive funds provider which has credibility and scale,” NZX chief executive Tim Bennett says:

He says SuperLife acquisition is the catalyst for Smartshares to further develop the ETFs market in New Zealand. Smartshares intends to launch a broad range of domestic and international debt and equity ETFs in the next 12 months.

“We expect that the creation of a vibrant exchange traded funds business in New Zealand will ultimately increase liquidity and interest in the market, and provide greater choice and cost effective diversification for investors,” Bennett said.

“We believe it would be extremely difficult to unlock the strategic benefits of growing the ETF market in New Zealand in a timely and cost effective manner without acquiring or merging with a passive manager such as SuperLife.”

“From an investment perspective, SuperLife has at its core a strong, passive approach and is one of the few New Zealand managers to embrace this. We expect a significant shift towards passive investment in the years ahead which is already evident in Australia and other international markets.”

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